Par Pharmaceuticals Companies Inc. (PRX) recently announced that the “go shop” period under the terms of the earlier announced merger agreement, between the company and an affiliate of leading global private equity firm TPG Capitals, has expired.
We note, on July 14, 2012, Par Pharma had entered into an agreement with TPG Capitals, whereby the latter proposed to acquire Par Pharma for $1.9 billion.
According to the terms of the agreement, TPG offered Par Pharma shareholders $50 in cash for each share of Par Pharma’s common stock. The offer price represented a premium of approximately 37% over the July 13, 2012 closing share price, which was the last full trading day before the announcement.
However, the agreement also permitted Par Pharma’s Board of Directors to search for alternative superior proposals until August 24, 2012, from other bidders.
During this period Par Pharma actively took part in search for proposals of potential suitors, whereby 3 out of 42 interested parties entered into confidentiality agreements with the company.
Regardless of Par Pharma’s solicitation efforts, the company failed to acknowledge any alternative acquisition proposal before the due date. The company also mentioned that early termination of the waiting period was granted by the Federal Trade Commission on August 24, 2012, under the Hart-Scott-Rodino Act.
Par Pharma has hence fixed a special meeting with the stakeholders of the company on September 27, 2012, for the adoption of the merger agreement.
We note that merger and acquisition activities are ramping up in the pharma/biotech sector. Over the last few weeks, major deals have been announced including Bristol-Myers Squibb's (BMY) acquisition of Amylin Pharmaceuticals Inc. and GlaxoSmithKline's (GSK) deal with Human Genome Sciences Inc.
We currently have a Neutral recommendation on Par Pharma. The stock carries a Zacks #3 Rank (Hold rating) in the short run.
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